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long term investment
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owning a home
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home ownership
Rent To Own - Is It Cheaper To Rent Or Own?
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One of the questions that keeps arising in today's real estate market from buyers is: it cheaper to rent a place to live than it is to own? That question is particularly important when there seems to be no end to the slippery-slide of declining home values.

While there is no one answer that fits everyone's circumstances, owning a home in the long run will most likely be cheaper for those that look at it as a long-term investment. Yes, many people's long-term investment went upside down in the last few years, but historically over many, many years, the trend is that home values rise.

Also consider that all of those people who lost, walked away or sold homes still have to have some place to live, and one aspect of a rent payment is - it will increase. Typically 5% annually on average. A locked in mortgage rate won't change unless you refinance, and especially for today, rates haven't been this low in a long time.

Ginnie Mae estimates that a homebuyer's mortgage is less than a rent payment after as soon as six years, when comparing a $110,000 home with a $1,000 mortgage to an $800 rental payment, adding the average annual rent increase. Also consider the tax benefits with having a mortgage - you can write off the interest you pay every year, plus, if you are able, you can pay your mortgage off faster and save a lot of money in the longer-term.

However with the tight grip our lending institutions have on granting loans - it seems they only give loans to those who don't need them. That has always been true and probably won't change, however ultimately they need to make loans to those who do need them in order to survive.

Many Americans today have recently become 'economically challenged,' affecting credit scores and the ability to secure a traditional loan. One way to still get started toward home ownership is to look into rent to own homes and see if that is a good option for your situation.

As a rent to own buyer you will be paying a monthly amount slightly higher than rent and the sale price of the home will probably be slightly higher than traditional homes for sale in the same neighborhood. It will take you a little more money 'down' to get into a rent to own home than you would pay for a first, last and damage deposit, but the money you put down will go toward the down payment or the price of the home when the lease ends and you purchase the home. Some home sellers and rent to own programs will allow a portion of your payments to go directly towards the purchase price or toward your down payment.

The buyer's goal of a rent to own home should be that during the period of the lease the buyer is working carefully to clear up credit issues with a mortgage officer or some other type of credible representation, and is able to qualify and transition into the homeowner when the lease agreement ends.

Another advantage of renting to own is that if the market continues to tumble, you don't have to take that home at the previously agreed price. If you've worked to get yourself pre-qualified, a seller may re-negotiate the sales price, or you can look for a better home. In that case you usually forfeit any money you put down, so be sure to educate yourself on rent to own home sales and be aware of the potential pitfalls to avoid.

In the long run it is most likely cheaper for people to own their own homes than it is to rent, but since renting usually precedes owning, try to take advantage of that time establishing a two-year work and residential history, correct any outstanding credit issues and, if it works for you, take advantage of a rent to own home opportunity.

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